GOVERNMENT has endorsed minimum capital thresholds for banks announced by the Reserve Bank last week, but says the policy should neither suffocate nor criminalise indigenous banks.
It urged banks to comply with the stipulated deadlines.
At a meeting with bankers in Harare yesterday, Acting Finance Minister Gorden Moyo said the new policy should be implemented in a manner that does not suffocate indigenous banks.
Also present at the meeting was Mines and Mining Development Minister Obert Mpofu; the majority shareholder in ZABG Bank and Environment and Hospitality Industry Minister Walter Mzembi.
"When it came to our attention, we had a number of questions," said Minister Moyo.
"We invited the governor (Dr Gideon Gono) to give us his perspective. After the (Cabinet) meeting, I am here to restate the Government position.
"We appreciate the policy, but as a matter of principle, the policy should not criminalise bankers. Instead, it should consolidate them. The purpose should not be to eliminate any banks, but they should grow.
"The US$12,5 million (for commercial banks) is low. Let us pitch our ceiling higher."
This put to rest speculation that the Government was considering reversing the policy.
Last week, Dr Gono announced a phased plan for the enforcement of capital requirements for banks.
Commercial and merchant banks will now be required to have minimum capital thresholds of US$100 million, from the current US$12,5 million and US$10 million, respectively.
Capital requirements for building societies were also increased from US$10 million to US$80 million.
Finance and discount houses from US$7,5 million to US$60 million and US$1 million to US$5 million for micro-finance houses.
Banks will be required to be fully compliant by June 20 2014, but should meet 25 percent of the new capital level by the end of this year.
They will be further required to be 50 percent and 75 percent compliant by June 30, 2013 and December 31 next year, respectively.
A deadline of 30 September 2012 was set for banks whose minimum paid-up equity capital does not comply with the respective prescribed level to submit a detailed recapitalisation plan to RBZ.
Amendments to the Banking Act will be made to support the new regulations, Minister Moyo said.
The new minimum thresholds triggered an outcry in the financial sector, which felt the move was unsustainable.
In response to the new minimum capital thresholds, Bankers Association of Zimbabwe vice president Mr Sam Malaba, wrote to the central bank appealing for downward revision of the capital thresholds.
He said the increase in capital thresholds would have negative consequences on the banking sector.
Mr Malaba, who is also the managing director of Agribank, said banks would be forced to curtail lending significantly if not sure about complying within stipulated deadlines.
He added that the new levels would affect mobilisation of lines of credit.
However, Dr Gono assured the bankers yesterday that the central bank was prepared to help struggling banks.
"There was a misconception that this requirement should be met overnight," said Dr Gono.
"Let us get on with the job. If you can't meet them, come and we will assist you. Let us stop the mischief."
Minister Moyo also expressed concern over high interest and bank charges.
"What is happening is not sustainable. We have asked the governor to make sure that depositors are protected.
"The central bank will be taking steps to curtail unacceptably high interest rates that borrowers are being subjected . . . and that bank charges and fees will be swiftly dealt with as directed by the Government," he said.